Narrow Victory for Netanyahu Shows Centrist Political Shift in Israel

January 21, 2013 at 07:00 PM EST

GWEN IFILL: I'm joined now by Margaret, who is at Likud Party headquarters in Tel Aviv tonight.

Margaret, we know who the winner apparently is, and that's Benjamin Netanyahu. But there's something else that is happening right underneath right here. There's another story, another drama playing out.

MARGARET WARNER: Yes.

The drama, Gwen, wasn't that Bibi Netanyahu won, though he won much more narrowly than people thought, but that the second-place finisher wasn't the old traditional Labor warhorse of Shelly Yachimovich, nor even the hot-ticket multimillionaire software developer and ultra-rightist, Naftali Bennett, but the centrist candidate, Yair Lapid, whom you just saw in my tape piece, who really spoke consistently to and about the middle class and their concerns.

Now, just five days ago, he was projected to win something like 11 seats in the Knesset. He's now projected to win 19.

GWEN IFILL: So, does this mean, Margaret, that Bibi Netanyahu, even though he is the winner, now has to look to him to form a coalition?

MARGARET WARNER: He does, Gwen.

And, in fact, Prime Minister Netanyahu was just here. He said he's already reached out. It was clear he meant to Lapid. Even before tonight's result, advisers to both camps were saying he was likely to reach out to Lapid first, because Lapid is a centrist. He has one non-negotiable demand, which is that the religious, the Orthodox here be subjected to the draft. Apparently, Netanyahu has no problem with that.

But, otherwise, he's appealing to both left and right because he's focusing on economic issues. In fact, there was a Likud — a prominent Likud backer here tonight who said, well, he's well known from television. He's good-looking. He's handsome. He's articulate and he speaks good sense.

So there isn't likely to be a huge rejection of a Lapid-Netanyahu coalition by Netanyahu's traditional supporters, but that still only leaves him with 50 of the 60-plus that he would need. So it's really where Netanyahu goes to next. Does he go to the right? Does he go to the left? Does he go to fringe parties that will influence the tenor of his next government?

GWEN IFILL: OK, Margaret, this is what you do really well. Would you explain to us why this internal drama that's happening in Israeli politics, the left — who is stronger tonight, the left, the right? What effect does that have on U.S. policy and especially on the peace process and the two-state solution we have all been watching so closely?

MARGARET WARNER: Well, it will come as no surprise, Gwen, to you to know that the Americans, the White House and so on, while keeping, of course, a good distance cared very much about who wins and who is in the coalition government.

And so I am sure, though I didn't speak to anyone tonight, but speaking to people before, that they are cheered by the fact that Lapid is the second strongest shower and he's the one who will be the main coalition partner with Netanyahu, not Naftali Bennett, who, as I reported, has taken a very tough stance towards the Palestinians, to saying we have made these offers over and over. They have been rejected. Let's stop trying to do it. Let's just annex part of the West Bank.

So that — the fact that Lapid is going to be his main partner, and Lapid has sort of steered a middle course — he still believes in the two-state solution — at the same time, he isn't advocating giving up, say, the bigger settlements on the West Bank — means that Netanyahu has more freedom to maneuver, if he wants it, on the peace process than he did in his current coalition with someone whose name I won't mention, but another right-wing person who is his coalition partner.

On Iran, there is not a huge difference. I think Bibi Netanyahu is driving that policy. It wasn't a point of contention in the campaign, with one exception. Lapid did say about two months ago he was critical of Netanyahu for trying to force President Obama to set a deadline on Iran. And he said the U.S. — Israel should be working with the U.S., not trying to put pressure on the U.S., to solve this Iranian nuclear weapons problem.

GWEN IFILL: Margaret, thank you. I get the feeling there's a lot more yet to unfold tonight and in the coming days as you're there reporting. Thank you so much.

We will hear more from Margaret as she travels through Israel, the West Bank and Gaza over the next week-and-a-half. Until then, you can read dispatches from her and from our reporting team online.